Tag Archives: ACA repeal

By Brad Roehrenbeck, General Counsel & VP, Legal Services, Compliance

On Monday, House Republicans unveiled the long-awaited legislation intended to overhaul former President Barack Obama’s signature health care legislation, the Patient Protection and Affordable Care Act (ACA). The bill, titled the American Health Care Act (AHCA), would make major changes to the ACA that impact individuals, employers, insurers, and providers in significant ways, as summarized below.

Provisions Impacting Employer-Sponsored Coverage

The most significant development impacting employers under the proposed law is removal of the employer mandate.

Large employers would no longer face penalties for failing to offer coverage that meets the minimum value and minimum essential coverage requirements of the ACA.

Additionally, the proposed bill would repeal the widely unpopular excise tax on high-cost coverage (the so-called Cadillac Tax) and offer tax credits to small businesses for providing coverage to employees.

The law would also require employers to indicate on Form W2 the months of coverage each employee was eligible for coverage. (Note: It appears the legislation is intended also to eliminate the ACA’s annual employer 1094/1095 reporting under Section 6056 of the Code. That would be a natural by-product of the employer mandate repeal, but the bill does not appear to eliminate this obligation expressly. This may be addressed in a future amendment to the bill.)

Changes to Account-Based Plans

The AHCA would make some significant changes to the rules governing HSA accounts for the first time since 2004.

The bill would increase the annual HSA contribution limit to equal the out-of-pocket maximum amount established for that year under the HSA rules (currently $6,550 for self-only coverage and $13,100 for family coverage).

The rules would also be modified to allow both spouses (if over 55) to make “catch-up” contributions to the same HSA account.

Also, a new special rule would allow HSA account holders to use HSA funds to pay for health care services performed up to 60 days prior to the account being established.

The bill would also reduce the excise tax on distributions not used for medical expenses from 20% to 10%.

Finally, the AHCA would remove the ACA’s cap on contributions to health FSA plans.

Changes to the Individual Market

While leaving in place popular provisions of the ACA such as the requirements that insurers cover dependents up to the age of 26 and pre-existing conditions, the AHCA would otherwise significantly redesign the ACA’s changes to the individual market.

First, the billdoes away with the individual mandate and repeals the cost-sharing subsidies and premium tax credits made available under the ACA to individuals who enroll in coverage on the exchanges.

In turn, the AHCA puts in place refundable tax credits that individuals could use to defray the cost of coverage, including coverage outside the exchanges.

Like under the ACA, these tax credits are eligible for advance payment. The amount of the credits will vary based on age and income, and excess payments can be deposited directly into an HSA account.

Tax credits are not available for any coverage that includes abortion services.

In place of the individual mandate, to incentivize individuals to maintain coverage, the bill provides for increased premiums (30% for 12 months) for individuals who have had a gap in coverage of at least 63 days.

The bill also creates the “Patient and State Stability Fund,” which provides significant payments to states ($10 to $15 billion per year through 2026) to help stabilize the individual and small group insurance markets and to assist high-risk patients.

Also, beginning in 2020, the ACA’s requirements around essential health benefits will sunset.

Finally, the billallows carriers greater flexibility to vary premiumsbased on age by up to a 5:1 ratio, up from 3:1 under the ACA.

Changes in the Medicaid Program

Unsurprisingly, the AHCA would repeal the ACA’s expansion of the Medicaid program.

It would also put into place a per-capital allotment of federal Medicaid dollars to the states, which is expected to rein in the future federal financial commitment to the program.

Similar to other provisions, the bill would bar Medicaid dollars from being used on abortion providers.

It would also require states to disenroll high-dollar lottery winners and incentivize states to assess participant eligibility on a more frequent basis. (Note: The bill will also reverse major cuts to the Medicare Disproportionate Share Hospital program, which provides safety net funding to more than 3,000 hospitals that disproportionately treat indigent patients).

Repeal of ACA Taxes

Finally, the AHCA would repeal numerous taxes—in addition to the Cadillac Tax discussed above—that either have gone into effect or are expected to become effective under the ACA.

Among those are:

The insurer tax (effectively a federal insurance premium tax),

The prescription medication tax,

The tax on over-the-counter medications,

The medical device tax.

It would also eliminate taxes on high-income earners that were levied under the ACA to help pay for the law.

Republicans have signaled an aggressive timeline for deliberations on the law. Committee hearings are expected to take place immediately, and the bill could reach the floor of the House in as little as one week.

President Trump has forecasted that he would like to sign the bill by Easter. We will continue to monitor developments, including any changes in the bill as it moves through the legislative process.

By Brad Roehrenbeck, General Counsel & VP, Legal Services, Compliance

As widely reported over the weekend, within a few hours of his swearing in, President Donald Trump signed his first Executive Order, calling on federal agencies to take immediate steps to curtail aspects of the Affordable Care Act and signaling the new administration’s plans to repeal and replace the Act altogether.

What does the Order say?

The Order itself has little if any tangible impact on the law. The Order states the administration’s official policy of pursuing a complete repeal and replacement of the ACA. It directs the heads of all federal agencies to take steps within their authority to remove or minimize any provision of the ACA that carries fiscal or regulatory burden. As the primary agencies charged with implementing the ACA, that action will likely come from the Department of Health and Human Services, the Department of Labor, and the IRS. The order also directs these agencies to afford greater flexibility to the States in areas impacted by the law. Finally, the order directs federal agencies to take steps to encourage and enable an interstate market for health coverage.

What does the Order mean for employers?

For now, the Order has no real impact on employers, except to signal that federal agencies will be acting quickly to relax various components of the ACA that impact employers, group health plans, and their members. The Senate has yet to confirm those President Trump has nominated to lead the agencies affected by the Order. Once those agency heads are confirmed, we expect to see regulations issued as prescribed by the Order and will be watching closely. Of course, both the Trump administration and members of both houses are said to be working on legislation to repeal and/or replace the ACA. Both the House and the Senate have laid the groundwork for streamlined procedures for repeal of the Act. They face more of an uphill battle to pass legislation to replace the ACA, as a 60-vote majority will be required in the Senate to pass replacement legislation. We will provide updates as details of those efforts become public. Until such legislation passes or further regulations are released, employers should bear in mind that the ACA remains in full force and effect.

ACA Repeal is Unsuccessful

As promised, the US House of Representatives held a vote yesterday, attempting to override President Obama’s veto on a bill which would have repealed the Affordable Care Act. The 241-186 vote in the House was a largely symbolic vote that was not expected to reach the two-thirds majority needed to override the veto.

The Associated Press reported that House Speaker Paul Ryan is planning a Republican proposal this year to replace the health care reform law passed six years ago.

The US Supreme Court has rejected the most recent challenge to the Affordable Care Act. Modern Healthcarereported that the Court refused to hear a case alleging that the ACA law should have originated in the House instead of the Senate. To date, lower courts have uniformly rejected the challenge. The Court’s refusal to take up the challenge leaves those decisions intact, likely putting the issue to rest.